ChoozOn De-Clutters the Online Deals Market

Yahoo alums raise capital before launch

Bellevue, Wash.-based ChoozOn hasn’t even launched its product yet and it’s already raised $3.2 million in angel investments from Michael Orsak, James Brown, and others. It’s a sign of either irrational exuberance toward deal-related startups (there are only around 300 or so in the market, with new clones springing up daily), or of VC confidence in the abilities of ChoozOn’s industry vet founders.

The company got its start back in 2009, when Nick Weir, Hunter Madsen, and Usama Fayyid, all alumni of Yahoo, joined forces to address what they viewed as a chaotic, inefficient marketplace. Between the deluge of daily deal emails from the likes of Groupon and LivingSocial, brand-specific loyalty programs, deal aggregators like CouponWarehouse.com, shopping sites like Gilt or Overstock.com, and even old-fashioned print coupons, consumers are overwhelmed with options and don’t have time to actually parse them. “Most people trip across deals as if it were by accident,” said Madsen. “Consumers know they aren’t being as efficient and effective as they could be and brands know they don’t have the kind of closed channel connection they want with consumers.”

Thus, ChoozOn. The site attempts to do all of those things, in a simple, non-invasive way. Once users sign up and indicate which brands and categories they’d like to see offers from, ChoozOn’s recommendation engine serves up deals based on those preferences into a Facebook-like feed. The service refines its recommendations as the consumer clicks around a site and actually buys things. Suggestions are honed further with a Pandora-esque “like” and “dislike” button. And a social element is in the works. Users can easily share relevant deals with Facebook friends who’ve created ChoozOn accounts.

The company has ideas for a bevy of social, sponsored, and ad banner features, too. The plan is to do what Facebook did for social networking and LinkedIn for professional networking, only for deals, Madsen said. Of course, it first needs to actually launch. ChoozOn will open to the public in the coming weeks.

One of ChoozOn’s notable features, Weir explained, is that users have given the service permission to exploit information about their preferences and demographics to target them very specifically. “Consumers and marketers can engage in a very explicit value exchange where consumers basically encourage the brands to offer deals,” he said. He argued that a privacy-safe, “permissioned” exchange is more valuable than a Facebook like or Twitter follow, because on those services, brands don’t have the technical ability or permission to make use of what specific information they may have about you.

In exchange for these opportunities, ChoozOn plans to earn commission from products purchased through its recommendation engine. The site has signed up 1,000 brands, including Hilton, Macy’s, Best Buy, and iTunes. It’s acquired these deals through a dedicated outreach team, which the company plans to build out further with its venture investment. ChoozOn currently has 40 employees.